We Were Involved with a Scam ICO, Here’s What Happened

CryptoHunt was an augmented reality game with elements of blockchain for which we developed the ICO and their CryptoHunt token. Writing the whitepaper was thrown in as a favor to the project lead and the document was written according to his specifications.

The game would let players earn CryptoHunt tokens for solving puzzles and moving around in the real world. These tokens would be redeemable for regular money. The game's profit would come from advertising partnerships with key locations (i.e. McDonald's paying to have a virtual chest in their restaurant, drawing people in there), ads, and token speculation on exchanges after the tokens are bought at the minimum price from players (a buyback program).

Cryptohunt

On paper, the idea was solid. A new Pokemon Go, big audience, high potential of blockchain upgrades down the line…

ICO

Because most ICOs are scams, our conditions for building one were as follows:

we want to be paid 100% in advance

the ICO contribution address would be cryptohunt.eth and not something like 0xab45728cb..., to minimize potential for typos and errors when sending

the ICO must have a refund mechanism wherein the funds would be returned to investors if the soft cap isn't reached.

The conditions were accepted and we proceeded to build the ICO after buying the cryptohunt.eth domain.

The soft cap was set to 5 million USD. This change – from the original 10 million – was made by the project lead one day before the ICO's launch. Despite being convinced by the ICO marketing agency he hired that the project would reach the soft cap of 10 million, he had his doubts.

Marketing

A few days after the ICO's launch, it became obvious that the marketing side of things failed. Bitfalls is subscribed to around 200 sources of cryptocurrency and blockchain news, and CryptoHunt wasn't mentioned a single time (except on Forbes which we do not consider relevant). Not only that, but in the middle of development the team was switched to the cheapest offer – an unknown Indian company took over development of the app. The game was supposed to be launched on iOS and Android.

The Android version of this “Pokemon Go killer” was originally being developed by a single person in Unity with only a few months of room until the deadline. The iOS version didn't exist in any shape or form. The website was also developed by a single person, later replaced.

The back end in terms of server, DDoS defense, geolocation, cheat detection and prevention, database capacity, crypto wallets built in etc. didn't exist at all. After we talked to the project lead into hiring a small Croatian company to handle the basics of this, the project started crawling again. Despite our explanations that this company is not professional, experienced, or knowledgeable enough to pull the whole project off and that they should only be a band-aid solution, the project lead justified keeping them around by quoting a lack of money to hire someone better. It was either Croatia or India.

Unfortunately (or fortunately?) the project fell apart much sooner than the infrastructure had the chance to implode.

Old, broken computer

During the ICO, the demo of the game was made available on Android devices. The first waves of disappointment started hitting the project's shore – the game was crashing, chests weren't opening or appearing, the map wouldn't load. The infrastructure already started collapsing at 100 users globally. The enthusiasm for the ICO, even from those who already invested, started waning.

The ICO we developed had the ability to refund all participants if the soft cap isn't reached. Seeing as we validated and audited our smart contract in great detail both internally and with third parties, we were confident that this part of the ICO would execute flawlessly. That is exactly what happened.

The ICO ended 2 weeks after the original launch and following our instructions 95% of the original investors got their ether back. The remaining 5% are still stuck in the vault because people seem to have forgotten about the money. This money cannot be accessed by anyone else and will be there for as long as they want it to be there – once they decide to issue the refund command they will get it back.

This part of the smart contract executed flawlessly and every investor's ether was returned without issues.

Our involvement in the project stopped there. We were active for another few days to help with the refund process, but our mission was successfully completed. We wrote a safe smart contract which people could invest through and get their money back from. No one lost money.

ICO 2

A few days after the ICO, the project lead, whom I will gladly name here as Saša Srdoč from Rijeka, Croatia organized a new ICO with help from Damir Bašić who was handling the social side of the ICO – communication with investors. Ether was being collected to a plain old Ethereum address, without a smart contract, without refund logic, without consulting us in any way about it.

Moreover, he was in such a rush to run away with the money, he didn't even wait for a transition of the cryptohunt.eth domain to the new address, something that people were actually warned about in the original whitepaper:

If anyone asks you to contribute to an address that is not cryptohunt.eth, it's a scam.

Over the following several days, odd claims started appearing on Telegram, from Saša having epilepsy which was “confirmed” with photos…

PhotoPhoto

… to claims about having incurable cancer and claims about the ICO team having collected bitcoin in the beginning (the project never officially collected BTC).

Telegram cancer announcement

By mid March, the project's developers weren't paid yet. The Croatian company doing the back end, the marketing company, the web devs, the social media people – no one got their money yet. A total of 243 ether was collected on the second address (around $100k in the moment of this writing).

On March 26th, the web developers had had enough. They changed the website to a warning about the scam.

Scam warning

A few hours later the website was offline. When asked what was going on, Damir blocked everyone in the Telegram channel and eventually deleted it. Saša deleted all of his social media accounts except Linkedin and deactivated his phone number. Not long after that, Marina, his alleged wife and the project's legal advisor and lawyer also disappeared. The original “investor” behind the project, Milan Urosevic, also disappeared from everything but Facebook.

We did manage to get in touch with Damir who claimed to have been merely following orders. The chat screenshots he sent confirm this claim.

What Next?

The CryptoHunt project is effectively dead but seeing as no significant code has been produced or copyrighted and no story really exists, we think it's a fairly solid idea for another team to take and bring to fruition.

We see the idea in general as very good and consider making cryptocurrencies approachable to the mainstream through games as an excellent method of increasing adoption – something we mentioned in our breakdown of 15 alternatives to CryptoKitties.

The game may have failed because of bad leadership, but the fact that there was at least some kind of product before the ICO speaks volumes in this industry of ICOs that are nothing but promises for years.

Although CryptoHunt won't be proceeding under its current name or leadership (or lack thereof), we believe a team of higher quality can bring it back from the dead and make a reality. We won't be part of that team, but wish them all the luck in the world.

Why?

A lot of people ask us why we've even participated in a project with so many red flags from the get go. The answer is simple: we were paid to make a high quality ICO and that part was executed according to specification. Our responsibility ended there and we knew we could do this part professionally. Other details of involvement would be negotiated later, depending on the game's success.

But why even write about it and go public? Doesn't this have defamation implications or jeopardize the company's reputation?

Transparency. For the sake of current and future clients, it's important for us to be transparent about this. Our part of the job was professionally executed and we want to be clear about this.

Hiding the perpetrator is no better than participating in the crime, and as a company heavily involved with unveiling fraud, we don't want to betray our readership and clients.

If you've been damaged by this project, get in touch. We'll connect you to other people who lost money and if you decide to file a class action lawsuit we'll provide the investigators and law enforcement with any and all information they need to find those to blame – from personal information to digital forensics.

Finally, we have to say this. Please approach all ICOs carefully and be aware that you can be defrauded even after copious amounts of independent investigating. Some people are just excellent actors and can defeat your objective analyses.

Bruno has a Master's Degree in English Language and Literature and Computer Science, and has been in web development and publishing for over a decade. He's been in the blockchain space since 2015. He's an avid board gamer and VR enthusiast - find him on Oculus and Steam as TheSwader. He frequently rants on Twitter.